GlaxoSmithKline Plc’s intention to mop up as large a stake as possible in its Indian subsidiary, without breaching the listing guidelines, is yet more evidence that MNCs remain convinced India is a key market for them. How important India is as a hunting ground is demonstrated by the fairly hefty premium that Britain’s biggest drug maker is willing to fork out for the shares—the offer price of R3,100 apiece discounts the CY14 estimated earnings by close to 38 times. To be sure, $1 billion is small change for GSK Plc, which, at the end of September 30, 2013, had $4.5 billion in cash. But an increasing number of MNCs are looking to get a larger share of the India spoils—earlier this year Unilever had committed more than $5 billion and recently Glaxo announced it would be setting up a plant here at an investment of R864 crore. The return on these investments can be lucrative—the Indian pharma market, which grew at just 10% in FY13, is worth some $12-12.5 billion today and is poised to double in the next few years. Perhaps MNCs are also hedging themselves, given patents for a host of blockbuster drugs are set to expire by 2017 which would mean smaller revenues for them in their home markets as they lose out to generics.

Which is why even if global drug majors are often put off by India’s policy towards patents—the Supreme Court ruling on Novartis’ Glivec, which failed to pass the test of enhanced therapeutic efficacy, is one such example—they’re not throwing in the towel. In fact, the government’s approach to drug pricing has continued to exasperate manufacturers and GSK Pharma has been among the worst-hit in the tussle between producers and distributors; the latter are demanding their commissions be maintained even if manufacturers have been forced to cap prices of some critical medicines. GSK Pharma’s revenues in Q3CY13 fell 7% yoy to R620.54 crore while net profits fell 33.7% yoy to R100.95 crore. However, GSK Plc’s offer is proof enough that MNCs are willing to make the most of what there is. Even before this, the top team at the drug major has gone on record to say that while pricing might pose problems—the amended drug pricing control order (DPCO) capped prices of 348 essential drugs across therapeutic segments—it is happy to play the volume game. Given the size of India’s catchment, that